It has been about a month since the last earnings report for Chubb (CB). Shares have lost about 8.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Chubb due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Chubb's Earnings Beat Estimates in Q4, Increase Y/Y
Chubb Limited’s fourth-quarter 2019 core operating income of $2.28 per share outpaced the Zacks Consensus Estimate by 8.6%. This upside was driven by higher premium revenues. The bottom line also improved 12.9% from the year-ago quarter.
Quarter in Detail
Net premiums written improved 9% year over year to $7.9 billion in the quarter. Net premiums earned rose 6.3% to $7.9 billion.
Net investment income was $858 million, up 1.2%.
Property and casualty (P&C) underwriting income was $533 million, up 12% from the year-ago quarter. Global P&C underwriting income excluding Agriculture was $556 million, up 76.3%.
Chubb incurred after-tax catastrophe loss of $353 million in the fourth quarter, plunging 30.2% year over year.
North America Commercial P&C Insurance: Net premiums written increased 9.4% year over year to $3.4 billion. Combined ratio contracted 870 bps to 82.6%.
North America Personal P&C Insurance: Net premiums written climbed 9.2% year over year to $1.1 billion. Combined ratio expanded 580 bps to 99.6%.
North America Agricultural Insurance: Net premiums written improved 40.4% from the year-ago quarter to $276 million. Combined ratio expanded 5590 bps to 105.4%.
Overseas General Insurance: Net premiums written rose 6.3% year over year to $2.3 billion. Combined ratio expanded 100 bps to 93.1%.
Global Reinsurance: Net premiums written declined 6% from the year-ago quarter to $109 million. Combined ratio of 94.6% contracted 7230 bps.
Life Insurance: Net premiums written were up 6.9% year over year to $622 million on the back of growth in the Asian international life operations.
Cash balance of $1.5 billion as of Dec 31, 2019 augmented 23.3% from the 2018-end level.
Total shareholders’ equity increased 10% from the level at 2018 end to $55.3 billion as of Dec 31, 2019.
Book value per share as of Dec 31, 2019 was up 11.7% from the figure as of Dec 31, 2018.
Core operating ROE was 7.9%.
Operating cash flow was $1.4 billion in the quarter under consideration.
Share Repurchase Update
In the quarter, the company bought back shares worth $310 million.
Core operating income of the year came in at $10.11 for 2019, up 7.1% year over year.
P&C net premiums written were $29.9 billion, up 5.6% year over year.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
Currently, Chubb has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions looks promising. Notably, Chubb has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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